BPI Responds to CFPB Proposed Rulemaking Regarding Credit Card Penalty Fees

Dear Director Chopra:

The Bank Policy Institute[1] is providing these comments in response to the Consumer Financial
Protection Bureau’s (“CFPB” or “Bureau”) Notice of Proposed Rulemaking (“NPR” or “proposal”)
regarding Credit Card Penalty Fees,[2] in which the CFPB proposes sweeping changes to the provisions in Regulation Z regarding credit card late fees.[3] In particular, the CFPB, proposes to significantly reduce the safe harbor for credit card late fee payments to $8 from its current levels of $30 for a first violation and $41 for a subsequent violation within the next six billing cycles. BPI supports thoughtful, well-founded efforts to promote transparency, consumer choice and competition in financial products and services. But the CFPB’s proposal is not well-grounded in law or fact and is deficient in multiple respects as detailed in this letter. If the CFPB does not address these deficiencies, any final rule that is substantially similar to the proposal would be arbitrary and capricious and contrary to law and would harm the very consumers the proposal purports to benefit.

To read the full comment letter, please click here, or click on the download button below.

[1] The Bank Policy Institute is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost two million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.

[2] CFPB, Notice of Proposed Rulemaking, Credit Card Penalty Fees (Regulation Z), 88 Fed. Reg. 18906 (March 29, 2023), available at https://www.govinfo.gov/content/pkg/FR-2023-03-29/pdf/2023-02393.pdf.

[3] This NPR follows a series of recent Bureau actions criticizing fees charged by consumer financial services providers, including a Request for Information on “Junk Fees,” a Report on Credit Card Late Fees, a blog criticizing fees charged by credit card issuers, as well as an Advance Notice of Proposed Rulemaking seeking input on credit card late fees. See CFPB, Request for Information Regarding Fees Imposed by Providers of Consumer Financial Products or Services, 87 Fed. Reg. 5801 (Feb. 2, 2022), available at https://www.govinfo.gov/content/pkg/FR2022-02-02/pdf/2022-02071.pdf; CFPB, Credit card late fees, (March 2022), available at https://files.consumerfinance.gov/f/documents/cfpb_credit-card-late-fees_report_2022-03.pdf; CFPB Blog, Ashwin Vasan and Wei Zhang, Americans pay $120 billion in credit card interest and fees each year, (Jan. 19, 2022), available at https://www.consumerfinance.gov/about-us/blog/americans-pay-120-billion-in-credit-card-interestand-fees-each-year/.